Apple: Strong IPhone Sales, Few Details on Watch; Shares Fall

Apple beat Wall Street expectations on revenue and earnings per share.

Revenue rose 32.5 percent to $49.61 billion from a year earlier, beating Wall Street’s expectations of $49.43 billion. Gross margin was 39.7 percent compared to 39.4 percent a year ago. China sales more than doubled from a year ago. He said the category also includes revenue from iPods and accessories, which saw declining sales in the quarter. The base Apple Watch Sport starts at $350, so we should also consider other items in the category performed worse this quarter.

The New York Times wrote, “Before the report, analysts had estimated that if revenue in the category exceeded $5 billion, it would be a sign that Apple had sold at least five million watches.” Revenue was around half that.

Apple reported that it has sold about 10.9 million iPads during the quarter, an 18 per cent drop compared to last year’s figures.

During a call with investors, Apple Chief Executive Officer Tim Cook suggested that the watch’s performance was particularly impressive because it initially was for sale only online and supply trailed demand.

It came as rival Microsoft posted Q4 that reflected a $7.6 billion(£5.9bn) writedown announced earlier this month on assets related to its troubled smartphone business. The mid-point of that range is below the average analyst estimate of $50.8 billion. “There’s a 97 percent customer satisfaction rate measured for Apple Watch, and internal market research says 94 percent of owners wear it and use it every day”.

Shares of Apple (AAPL – Get Report) were falling 8% to $120.29 in after-hours trading Tuesday, after the iPhone maker reported its fiscal third quarter results.

The consensus among analysts was that Apple would sell around 4 million Apple watches during this quarter. In October 2014, Apple unveiled the next iteration of its tablets- iPad Air 2 and iPad mini 3, with both sporting Touch ID fingerprint sensor found on the iPhone.

Apple sales grew 15 percent in Americas, 19 percent in Europe, 112 percent in Greater China and 26 percent in Rest of Asia Pacific.

Besides the Apple Watch, Apple has released new models of other devices and launched its Apple Pay electronic payments service last fall and a streaming music service this month.